Bilateral investment treaty
||The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. (October 2013)|
A bilateral investment treaty (BIT) is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in another state. This type of investment is called foreign direct investment (FDI). BITs are established through trade pacts. A nineteenth-century forerunner of the BIT is the friendship, commerce, and navigation treaty (FCN).
Most BITs grant investments made by an investor of one Contracting State in the territory of the other a number of guarantees, which typically include fair and equitable treatment, protection from expropriation, free transfer of means and full protection and security. The distinctive feature of many BITs is that they allow for an alternative dispute resolution mechanism, whereby an investor whose rights under the BIT have been violated could have recourse to international arbitration, often under the auspices of the ICSID (International Center for the Settlement of Investment Disputes), rather than suing the host State in its own courts. This process is called investor-state dispute settlement.
The world's first BIT was signed on November 25, 1959 between Pakistan and Germany. There are currently more than 2500 BITs in force, involving most countries in the world. Influential capital exporting states usually negotiate BITs on the basis of their own "model" texts (such as the US model BIT).
NGOs have spoken against the use of BITs, stating that they are mostly designed to protect the foreign investors and do not take into account obligations and standards to protect the environment, labour rights, social provisions or natural resources. Moreover, when such clauses are agreed upon the formulation is legally very open-ended and unpredictable.
BITs involving the U.S.
- Albania: signed January 11, 1995, entered into force January 4, 1998
- Argentina: signed November 14, 1991, entered into force October 20, 1994
- Armenia: signed September 23, 1992, entered into force March 29, 1996
- Azerbaijan: signed August 1, 1997, entered into force August 2, 2001
- Bahrain: signed September 29, 1999, entered into force May 30, 2001
- Bangladesh: signed March 12, 1986, entered into force July 25, 1989
- Bolivia: signed April 17, 1998, entered into force June 6, 2001
- Bulgaria: signed September 23, 1992, entered into force June 2, 1994
- Cameroon: signed February 26, 1986, entered into force April 6, 1989
- Democratic Republic of the Congo (Kinshasa): signed August 3, 1984, entered into force July 28, 1989
- Republic of the Congo (Brazzaville): signed February 12, 1990, entered into force August 13, 1994
- Croatia: signed July 13, 1996, entered into force June 20, 2001
- Czech Republic: signed October 22, 1991, entered into force December 19, 1992
- Ecuador: signed August 27, 1993, entered into force May 11, 1997
- Egypt: signed March 11, 1986, entered into force June 27, 1992
- Estonia: signed April 19, 1994, entered into force February 16, 1997
- Georgia: signed March 7, 1994, entered into force August 17, 1997
- Grenada: signed May 2, 1986, entered into force March 3, 1989
- Honduras: signed July 1, 1995, entered into force July 11, 2001
- Jamaica: signed February 4, 1994, entered into force March 7, 1997
- Jordan: signed July 2, 1997, entered into force June 12, 2003
- Kazakhstan: signed May 19, 1992, entered into force January 12, 1994
- Kyrgyzstan: signed January 19, 1993, entered into force January 12, 1994
- Latvia: signed January 13, 1995, entered into force December 26, 1996
- Lithuania: signed January 14, 1998, entered into force November 22, 2001
- Moldova: signed April 21, 1993, entered into force November 25, 1994
- Mongolia: signed October 6, 1994, entered into force January 1, 1997
- Morocco: signed July 22, 1985, entered into force May 29, 1991
- Mozambique: signed December 1, 1998, entered into force March 3, 2005
- Panama: signed October 27, 1982, entered into force May 30, 1991. Amendment: signed June 1, 2000, entered into force May 14, 2001
- Poland: signed March 21, 1990, entered into force August 6, 1994
- Romania: signed May 28, 1992, entered into force January 15, 1994
- Rwanda: signed February 19, 2008, entered into force January 1, 2012
- Senegal: signed December 6, 1983, entered into force October 25, 1990
- Slovakia: signed October 22, 1991, entered into force December 19, 1992
- Sri Lanka: signed September 20, 1991, entered into force May 1, 1993
- Trinidad and Tobago: signed September 26, 1994, entered into force December 26, 1996
- Tunisia: signed May 15, 1990, entered into force February 7, 1993
- Turkey: signed December 3, 1985, entered into force May 18, 1990
- Ukraine: signed March 4, 1994, entered into force November 16, 1996
- Uruguay: signed November 4, 2005, entered into force November 1, 2006
Not yet ratified
- Belarus: signed January 15, 1994, not yet ratified
- El Salvador: signed March 10, 1999, not yet ratified
- Haiti: signed December 13, 1983, not yet ratified by Haiti or the U.S.
- Nicaragua: signed July 1, 1995, not yet ratified by the U.S.
- Russia: signed June 17, 1992, not yet ratified by Russia
- Uzbekistan: signed December 16, 1994, not yet ratified
- Pakistan: negotiations announced September 28, 2004, began February 7, 2005
Note: Many countries that do not have BITs with the U.S. are instead covered by free trade agreements.
- See W. Michael Reisman et al.,"International Law in Comparative Perspective" (2004), p. 460.
- See Jarrod Wong, "Umbrella Clauses In Bilateral Investment Treaties: Of Breaches of Contract, Treaty Violations, and the Divide Between Developing and Developed Countries In Foreign Investment Disputes", George Mason Law Review (14 Geo. Mason L. Rev. 135) (2007).
- "Germany - Pakistan BIT (1959)". Retrieved August 10, 2015.
- "International Investment", by Americo Beviglia Zampetti and Pierre Sauve, in Research Handbook in International Economic Law (E. Elgar, 2007), p215; http://www.bilaterals.org/article-print.php3?id_article=717
- See Rudolf Dolzer and Christoph Schreuer, Principles of International Investment Law, Oxford, 2008, p. 2. Also see UNCTAD, World Investment Report (2006) XVII, 26.
- http://www.ustr.gov/trade-agreements/bilateral-investment-treaties (discusses model BITs). See also INTERNATIONAL INVESTMENT INSTRUMENTS: A COMPENDIUM VOLUME XIV, 01/03/05 (UNCTAD/DITE/4(Vol.XIV)), Part II, for the Canadian model BIT.
- Protest against EU investment policy Transnational Institute
- http://tcc.export.gov/Trade_Agreements/Bilateral_Investment_Treaties/index.asp Trade Compliance Center
- Agreement on Trade Related Investment Measures (WTO agreement)
- Trade and Investment Framework Agreement (TIFA)
- United Nations Conference on Trade and Development (UNCTAD) list of all current BITs between states, with links to treaty texts.
- The Trade Compliance Center, U.S. Department of Commerce International Trade Administration - Includes links to U.S. BIT texts.
- Canadian Treaty Information
- Investment Arbitration Reporter - news site tracking disputes under investment treaties
- Investor-State LawGuide - online research tool for investment treaty arbitration
- Discover the dark side of investment Resources critiquing investment agreements for prioritising corporate profits above human rights and protection of the environment